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ASIAN JOURNAL OF MANAGEMENT RESEARCH

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ASIAN JOURNAL OF MANAGEMENT RESEARCH
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  ASIAN JOURNAL OF MANAGEMENT RESEARCH Online Open Access publishing platform for Management Research   © Copyright 2010 All rights reserved Integrated Publishing association Review Article ISSN 2229 – 3795    ASIAN JOURNAL OF MANAGEMENT RESEARCH 578   Investigating Customer Relationship Management and service quality inMalaysian higher education   Wiwied Virgiyanti 1 , Abu Hassan Abu Bakar  2 , Muhammad Asim Tufail 1 1- Ph.D candidate, School of Housing, Building, and Planning, Universiti Sains Malaysia,Penang, Malaysia2- Asscociate Professor,School of Housing, Building, and Planning, Universiti Sains Malaysia,Penang, Malaysiawiwied.virgiyanti@gmail.com  ABSTRACT  In today’s highly-competitive and cut-throat service industries, managing the balance betweencosts of delivery, level of service and customer satisfaction can mean the difference between business growth, and dwindling customers and market share. Customer retention has becomevital, as even a small reduction in customer defection can have a disproportionately positiveeffect on profitability. Excellent customer relationships are the major key of organizationaltriumph. Today world has moved toward recognizing the positive relationships with customersas it is vital for the long-term success. Higher Education Institutions are even no exception asthese organizations face greater challenge to sustain good relationship with customers and ensurethat quality services are provided as well. Thus, this research investigates Customer RelationshipManagement (CRM) system at Student Admission section in Malaysian higher educationinstitution and to study the customers’ satisfaction to the service given by the university. Toachieve the objectives, survey was conducted to analyze the implementation of CRM and qualityof the service provided. This study comes up with the analysis of the data collected from thequestionnaire distributed to the respondents. The analysis pictures the condition of the CRMimplementation in the organisation and the quality of the service provided by the university,from the students’ point of view.  Keywords: Customer Relationship Management, Service Quality, Higher Education, Student,Information and Communications Technology.  1. Introduction   Nowadays, it is common for Higher Education Institutions to implement CRM system solutionsto meet the business needs. The literature indicates that the higher education market is now wellestablished as a global phenomenon, especially in the English-speaking nations. In response tothese changes, the value, effectiveness and potential benefits of using marketing theories andconcepts, which have been effective in the business world, are gradually being applied by manyuniversities to gain a competitive edge and a larger share of the international market. Therefore,in the context of increasing competition universities are forced to equip themselves with thenecessary marketing intelligence and information that would enable them to face the challenge of an international market for higher education (Binsardi & Ekwulugo, 2003).  ASIAN JOURNAL OF MANAGEMENT RESEARCH 579This research covers three main scopes; with focus on Student Admission section at InternationalPostgraduate Office as the service provider, international post graduate students as the customers,and the elements that are utilized by the university to maintain the relationship with thecustomers, which are people, process, technology, and information.  2. Theoretical Background of the Study2.1 Customer Relationship Management (CRM)  CRM is built especially on the principles of relationship marketing (Berry, 1983). This emphasison relationship, as opposed to transaction, is redefining how companies are interacting with their customers (Pan & Lee, 2003). In an era of mature markets and intensive competitive pressure,more and more companies realize that their most precious asset is the existing customer base (Athanassopoulos, 2000 ). Customer relationship comprises of a continuous interaction inepisodes over time (Buttle, 2008). It should also emphasize on the importance of viewing CRMas a comprehensive process of acquiring and retaining customers, with the help of businessintelligence, to maximize the customer value (Ngai, Xiu, & Chau, 2009). The notion that valuecan be created by cooperation has led marketing managers to search for “win-win” positions as away to enhance profitability through collaborative value creation (E. W. Anderson, Fornell, &Lehmann, 1994).CRM comprises of five distinct but interrelated goals: customer acquisition, customer retention,customer development, customer consultation, and customer conversion. Each of these goals can be achieved using distinct and well-known marketing practices, at the same time, achievementof one goal contributes to achieving other goals (Goldsmith, 2010). Integrating the proceduresand technologies used at each stage results is a synergistic effort that should benefit companiesand can guide empirical research. CRM aligns business processes with customer strategies to build customer loyalty and increase profits from time to time. Greenberg (2001) mentions that a panel of CRM experts defined CRM as a business strategy to select and manage customers tooptimize long-term value. CRM requires a customer-centric business philosophy and culture tosupport effective marketing, sales, and service processes. CRM applications can enable effectiveCustomer Relationship Management, provided that an enterprise has the right leadership,strategy, and culture.The CRM infrastructure is made up of four key components which are the information, process,technology and people. Each of these components is critical in delivering successful CRM program. CRM is not a linear method. Generally, a CRM program is made up of all theindividual CRM projects. To ensure successful integration of all these projects, organizationsmust follow a well-defined method (Kincaid, 2003).CRM system can be seen as a solution work with a certain regions working patterns. It gathers,stores, and analyzes the data, organizes the business, confers the services to the customers, andalso helps decision-making. The CRM-Solution Map visualizes the business processes supported by CRM system, the functional categories of CRM and the users of the CRM system (Greenberg,2001). The needs for the CRM solution include the Marketing, Sales, Order, Production andService process.  ASIAN JOURNAL OF MANAGEMENT RESEARCH 580  2.2 Service Quality  Service is now a key area in which companies can achieve competitive advantage. Thus, leadingmanufactures and many organizations are focusing on service as a way of sustaining competitiveedge. In addition, rapid advances in technology have led to the development based on high-techsolutions for instance the e-commerce.Quality is commonly viewed as the customer's perception of service excellence. This means thatquality is defined by the customer's impression of the service provided. (Parasuraman, Zeithaml,& Berry, 2004) state that “a service company is defined by its service quality, if the servicecompany’s service is mediocre, the company is mediocre.” Consequently, ( Parasuraman,Zeithaml, & Berry, 1985) note that there are three main themes to be considered in servicequality definition as listed below:• Service quality is more difficult for the customer to evaluate than product quality;• Service quality perceptions result from a comparisons of customer expectations with actualservice performance; and• Quality evaluations are not made solely on the outcome of the service, they also involveevaluations of the way the service is delivered.According to (Berry & Parasuraman, 1992), a well-designed and implemented service qualityinformation system raises the possibility that a company will invest service improvement moneyin ways that actually improve service. It also continually emphasizes the need to improveservice. Capturing and disseminating data repeatedly reveal not only progress, but problems; notonly strengths, but weaknesses. The five elements of the service quality information system are;(i) measure service expectations, (ii) emphasize information quality, (iii) capture customers'words, (iv) link service performance to business results, and (v). Reach every employee.RATER of SERVQUAL was srcinally measured on 10 aspects of service quality: reliability,responsiveness, competence, access, courtesy, communication, credibility, security,understanding or knowing the customer, and tangibles. It measures the gap between customer expectations and experience. It is used as service quality framework to measure the gap betweencustomer expectations and experience. The RATER factors or quality dimensions is aframework invented by Dr. Leonard Berry and his colleagues at Texas A&M University, whofound that customers evaluate service quality based on five factors (K. Anderson & Zemke, 1998). The factors are Reliability, Assurance, Tangible, Empathy and Responsiveness.  2.3 CRM in Higher Education Institutions  Higher Education Institution (HEI) is the big market to implement CRM. CRM providers alsosee this as a giant market to catch; therefore they build CRM solutions that can fit with any process dealing with the constituents in the Higher Education Institution. The literature indicatesthat the higher education market is now well established as a global phenomenon, especially in  ASIAN JOURNAL OF MANAGEMENT RESEARCH 581the English-speaking nations (Binsardi & Ekwulugo, 2003)and An evidence of mercerization andderegulation of universities is also found in the literature by (Allen & Shen, 1999); (Dill, 2003);(Young, 2002); (Taylor, 2003); (Jongbloed, 2003); (Maringe, 2010).Developing CRM systems in higher educational contexts it is not always a mere translation of those applied in the business field. This is why CRM technologies, applications and processesrequire adaptation to the distinguishing characteristics of the institution (Raman, Wittmann, &Rauseo, 2006). In response to these changes, the value, effectiveness and potential benefits of using marketing theories and concepts, which have been effective in the business world, aregradually now being applied by many universities: with a view to gaining a competitive edge,and gaining a larger share of the international market. The elements of globalization in higher education are widespread and multifaceted: it has been estimated that more than 1.6 millionstudents study outside of their home countries (Coates & Adnett, 2003); (Farr, 2003). Researchinto higher education choice, or consumer behavior in higher education markets, although notextensive, has principally been stimulated by an individual institution’s need to anticipate thelong-term implications of choice and to understand the key factors involved in student choice (Farr, 2003; Foskett & Hemsley-Brown, 2001). Educational institutions should also apply CRMto better know and understand their customers, i.e. students and should address specific actionswith dynamicity, in order to improve the value provided to every one of them, so to improvestudents’ performance (Daradoumis et al., 2010).There are three types of possible student customers in the context of higher education, i.e. right,wrong and at-risk right customers. Right customers provide long-term revenue streams for theorganization in the form of alumni gift-giving that can last for many years following graduation.Wrong customers are those who do not provide this form of long-term revenue but also areincompatible along critical characteristics of academic preparation and benefits sought fromhigher learning. Wrong customers have the ability to drive at-risk right customers away. Rightcustomers need to be retained, wrong customers need to be allowed to divest themselves and at-risk right customers need to be recovered. Strategies need to be put into place to help theinstitution achieve its goals of competitiveness and long-term profitability (Harrison-Walker,2010).In this dynamic, competitive environment the future success of educational establishments restson the ability to differentiate them and build meaningful relationships not only with existingstudents but with the potential students as well. To achieve this, internal systems need to bemaximized to their full potential through the integration and use of internal CRM which can pulltogether disseminated pieces of information from all types of databases and sources. And at thesame time, including Service Quality as a business strategy and committing all levels of theorganization to delivering world class customer service will produce outstanding service result.After all, the success will be achieved with a consistent approach to quality service delivery.  2.4 Higher Education Institutions in Malaysia  The Khir Johari Report of 1967 (Sufean, 1996) defines higher education as any professional or academic study that requires as a prerequisite the minimum academic qualification of a Higher   ASIAN JOURNAL OF MANAGEMENT RESEARCH 582School Certificate or its equivalent for admission into an institution at university level, and aMalaysian Certificate of Education or its equivalent for admission at college level. Consequently, based on the report, a person need 11 years of schooling before he/she can be admitted into acollege or polytechnic, or 13 years to enter a university.Malaysia is set to welcome 80,000 international students to study in Malaysia by the year 2010.Higher education opportunities in Malaysia are provided by 20 public universities, 24 polytechnics, 37 public community colleges, 33 private universities, 4 foreign university branchcampuses and about 500 private colleges (Malaysia, 2011).  3. Research Objectives  The Objectives of the research are set as follows:• To investigate the recent condition of the Customer Relationship Management (CRM)implementation at Student Admission section, in Malaysian Higher Education Institution.• To study the customers’ satisfaction to the services given by the university, utilizing existing process and technology that the university provides.  4. Research Methodology  A case study of Universiti Teknologi Malaysia was used for this study with a total of 75 studentsas the targeted population, selected at random from the international postgraduate students. Non- parametric test of Chi-square was conducted to identify the significant factors relating toimplementation of CRM-SQ in Malaysian universities based on the postgraduate students’experiences.As the concepts associated between customer relationship management and service quality arequalitative by nature and context dependent, a mixed analysis approach was used for this study.Data collection and analysis techniques from the distributed questionnaire were selected tomaximize the reliability and validity of data and subsequent findings, such as, Chronbach-Alpha(Test of Reliability), Chi-Square (Test of Significance) and Descriptive Analysis (Percentages).The questionnaire on 4-Likert scale was distributed to International Postgraduate Office to getthe clear picture of current status of CRM implementation for attracting and retainingInternational students. The respondents are the administration group. The objective of choosingthis group as respondents is because they are the front gate of the student admission process. Thequestionnaire statements were developed through the CRM infrastructure elements developed byKincaid (2003).  Table 1 : The mapping of the questionnaire with CRM infrastructure  CRMInfrastructureStatement
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